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Millions of copies of his book later, hundreds of keynotes, and a following in the millions, a decade later we are still not starting with why as corporations.
How do I know this? In 2018, Smallbusinesstrends.com states that fifty percent or more of start-ups never made it to their fifth year in business.
If you read the report, the numbers are staggering. Yes, capitalization is a key factor, but if you look at the
Top 10 causes of small business failure:
- No market need: 42 percent;
- Ran out of cash: 29 percent;
- Not the right team: 23 percent;
- Got outcompeted: 19 percent;
- Pricing / Cost issues: 18 percent;
- User un-friendly product: 17 percent;
- Product without a business model: 17 percent;
- Poor marketing: 14 percent;
- Ignore customers: 14 percent; and
- Product mistimed: 13 percent.
You will see quite quickly that people could solve the majority of the reasons if they were more focused on why they were in business instead of what they supposedly produced.
The factor that stands out first and foremost is that forty-two percent came to this conclusion, after way too much time, sweat, and effort, that there was “no market need.”
This means that they did not conduct proper due diligence to understand whether what they were creating was either a real problem for others or their solution did not solve the problem that people had. “Product without a business model,” “poor marketing” and “product mistimes” support this argument. All of this then makes me wonder why people do not take the time to understand whether or not they are actually solving a real problem or not, whether there is a minimum viable audience to support the product or service and how to communicate with these people in ways that people will listen, understand the value to them and be compelled to engage.
A further factor that needs to be considered is that nearly twenty-five percent of start-ups blame the team for failure.
My questions are:
- Who creates the team?
- Who communicates mission, vision, and values to the team?
- Who is responsible for making sure that the team understands goals, challenges, and opportunities and are working together to create a successful venture?
The answer is simple, leadership? Leadership needs to make sure that whether it is internal clients or external, everyone understands where you are as a company, where you are going, who you serve, and, most importantly why?
If you cannot explain your why, simply and in a way that resonates with all your stakeholders, failure is almost assured. No product or service sells itself. There is no magic bullet or success hack that beats effective communication.
Nineteen percent blame their failure on being “out competed.” Is the true, or would a more plausible reason be that they could not communicate their vision in a way that led to a viable outcome?
As leaders, it is our responsibility to communicate effectively. To motivate, inspire, and provide a vision or what is possible and give people the tools that they need to be successful. We cannot just hire people and hope that they will succeed. Instead, we need to enable them to do so by demonstrating to them how their efforts matter and how their work creates opportunity for everyone to succeed together.
In other words, inspire people by explaining the why behind what they do.
If we do not do this, then how can we expect others to care, be inspired, and help us achieve our goals?
Here is some food for thought. During the summer of 2019, I posed two questions:
- What are the factors that would keep you engaged and loyal within your current company?
- What are the factors that would cause you to quit, even if you did not have another job?
The answers are profound and can be read, in their words, in my latest eBook, How is Your Brand Perceived Internally?